Aei vs. Coa & Hcrc Case

8/10/2019 Aei vs. Coa & Hcrc Case

1/17

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TJIIRD

DIVISION

ATLANTIC ERECTORS,

INC.,

Petitioner,

-

\'ersus

COURT OF APPEALS

and

G.R.

No. 170732

Present:

VELASCO, JR., J., Chairperson,

PERALTA,

ABAD,

PEH.Ez, and

MENDOZA, JJ.

HERBAL COVE

REALTY Prnmulgatcd:

. t J) _

J

-;. s/

CORPORATION,

.

) ) ~

. Respondents. L1

October 2012

- ) ~ - -

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ - - - - { t ) ~ - - - - x

D E I S IO N

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules

of

Court assailing the Court of Appeals (CA) Decision

1

dated February 28,

2005 and Resolutions dated September

7, 2 0 0 Y ~

and December

5,

2005

3

in

CA-G.R. SP No. 52070. The assailed decision atlirmed with modification

the Decision

4

of the Construction Industry Arbitration Commission (( lAC),

dated March

II,

1999, ii CIAC Case No. 13-98; while the assailed

resolutions denied petitioner Atlantic Erectors, Inc. s Motion ror Partial

Reconsideration.

Designated

Actinu Member, per Special

Order

No. 1299 dated August

2 )

12.

Penned

by Assouate

Justice

Godardo A. Jacinto,

with

Associate

Justices

Bicnvcnid(l

l _

l


2/17

Decision - 2 - G.R. No. 170732

The facts of the case, as culled from the records, are as follows:

Respondent Herbal Cove Realty Corporation (respondent) engaged

DP Architects Philippines to prepare architectural designs and RA&A

Associates to provide engineering designs for its subdivision project known

as The Herbal Cove located at Iruhin West, Tagaytay City. It likewise

hired Building Energy Systems, Inc. (BESI) to provide management services

for the construction and development of the project. On June 20, 1996,

respondent and Atlantic Erectors, Inc. (petitioner) entered into a

Construction Contract5whereby the latter agreed to undertake, accomplish

and complete the entire works for the implementation of Construction

Package A consisting of four (4) units of Townhouse B and 1 unit of Single

Detached A1 of the project6 for a total contract price of P15,726,745.19

7

which was later adjusted to P16,726,745.19 as a result of additional works.8

Petitioner further agreed to finish and complete the works and deliver thesame to respondent within a period of one hundred eighty (180) consecutive

calendar days reckoned from the date indicated in the Notice to Proceed9to

be issued to petitioner.10

To secure the completion of the works within the

time stipulated, petitioner agreed to pay respondent liquidated damages

equivalent to one-tenth of one percent (1/10 of 1%) of the contract price per

calendar day of delay until completion, delivery and acceptance of the said

works by respondent to a maximum amount not to exceed ten percent

(10%).11

Petitioner was instructed to commence construction on July 8, 1996.12

In a letter13

dated January 6, 1997, petitioner requested for extension of time

5 Id. at 136-145.6 Id. at 136.7 Id. at 138.8 Atlantic Erectors, Inc. v. Herbal Cove Realty Corporation, G.R. No. 148568, March 20, 2003, 399SCRA 409, 411; 447 Phil. 531, 536 (2003).9 Exhibit H; Expanding Envelope No. 1.10 CA rollo, p. 139.11 Id. at 142.12 Rollo, p. 31.13 Exhibit J; Expanding Envelope No. 1.


3/17


equivalent to the number of days of delay in the start of the works brought

about by the belated turnover of the sites of the building. Additional

extension was requested due to bad weather condition that prevailed during

the implementation of the projects, again causing excusable delay. In a

letter14

dated January 11, 1997, respondent allowed the requested schedule

adjustments with a reminder that liquidated damages shall be applied beyond

the extended periods. Petitioner was allowed to complete and deliver the

housing units until the following dates:

SDA-15 15 March 1997 or an extension of 67 calendar daysTH 16-A and TH 16-B 7 March 1997 or an extension of 59 calendar days

TH 17-A and TH 17-B 7 April 1997 or an extension of 90 calendar days15

Petitioner, however, still failed to complete and deliver the units within the

extended period.

On September 22, 1997, respondent required petitioner to submit a

formal written commitment to finish and complete the contracted works,

otherwise, the contract would be deemed terminated and respondent would

take over the project on October 1, 1997 with the corresponding charges for

the excess cost occasioned thereby, plus liquidated damages.16

On

October 3, 1997, respondent informed petitioner that the formers

management had unanimously agreed to terminate the subject construction

contract for the following reasons:

1. After a review and evaluation by the management group of the

works done in the Project, we found blatant defects in the workmanship of

the houses;2. Delayed completion of the project; and3. Lack of interest to make a firm commitment to finish the project.

17

14 Exhibit K; Expanding Envelope No. 1.15 CA rollo, p. 59.16 Exhibit T; Expanding Envelope No. 1.17 Exhibit U; Expanding Envelope No. 1.


4/17


Respondent, thereafter, entered into a Construction Administration

Agreement18

with Benedict O. Manalo and Associates, Engineers and

Construction Managers to finish, complete and deliver the housing units

started by petitioner.

On June 3, 1998, respondent filed with the CIAC a Request for

Arbitration19

against petitioner praying for the payment of liquidated

damages, cost to remedy defective workmanship, excess costs incurred to

complete the work, attorneys fees and litigation expenses. The case was

docketed as CIAC Case No. 13-98.

Prior thereto, or on November 21, 1997, petitioner instituted with the

Regional Trial Court (RTC) a civil case against respondent where it sought

to recover the sum representing unpaid construction service already

rendered, unpaid construction materials, equipment and tools, and cost ofincome by way of rental from equipment of petitioner held by respondent.

20

The case was, however, dismissed on motion of respondent invoking the

arbitration clause, which dismissal was affirmed by the Court.21

In answer to respondents request for arbitration, petitioner alleged

that the delay was attributable to: (1) delayed turnover of the site; (2) cause

of two typhoons; 3) change orders and additional works; (4) late approval of

shop drawings; (5) non-arrival of chimney expert; (6) delayed payments; and

(7) non-payment of the last two billings.22

It also argued that respondent

suspended the construction works depriving it of the opportunity to complete

the works on or before November 15, 1997.23

It also insisted that there was

unlawful termination of the construction contract.

18 Exhibit V; Expanding Envelope No. 1.19 Expanding Envelope No. 1.20 Rollo, p. 33.21 Id. at 34.22 CA rollo, p. 66.23 Id. at 71.


5/17


After the reception of the parties evidence and the submission of their

respective memoranda, the CIAC ordered respondent to pay petitioner

P1,087,187.80, with 6% interest per annum from the time the award

becomes executory.24

The CIAC summarized the awards as follows:

A. FOR THE CLAIMANT [Respondent herein]

Claim Award

Liquidated Damages P 1,572,674.51 P 0.00

Cost to Remedy Defective

Workmanship

1,600,000.00 0.00

Excess Cost to Complete 2,592,806.00 506,069.94

Attorneys Fees and Cost of

Litigation Excluding ArbitrationFees

2,000,000.00 0.00

Total Claims P 7,765,480.51 P 506,069.94

B. RESPONDENTS [PETITIONERS] CLAIM

Claim Award

Retention Amount P 899,718.50 P 1,012,139.89

Work Accomplishment Collectible 4,854,229.94 821,556.09Deduct Unliquidated

Downpayment

(P3,145,349.04 - P1,968,044.89)

1,177,304.15

Materials, tools and equipment

left at jobsite

1,595,551.00 936,866.00

Rental cost of tools and

equipment left at jobsite

800,000.00 0.00

Attorneys Fees and Cost of

Litigation excluding Arbitration

Fees

1,000,000.00 0.00

Total Counterclaim P 8,149,499.95 P 1,593,257.74

C. NET AWARD FOR [PETITIONER]

Net Award P 1,087,187.8025

The CIAC found that petitioner incurred delay in the completion of

the project. While it did file a request for extension which was granted until

April 7, 1997, the project remained incomplete and no further extension was

asked.26

Notwithstanding the delay, the CIAC found the termination of the

contract illegal for respondents failure to comply with the requirements of

24 Id. at 75.25 Id.26 Id. at 67.


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termination, as the contract specifically provides that petitioner be given

15-day notice prior to such termination.27

It added that petitioners delay

was overridden by the unlawful termination of the contract.28

Consequently,

respondent was not awarded liquidated damages.29

For failure to submit

sufficient evidence, the CIAC also found respondent not entitled to the

additional cost to complete the project.30

As to the cost of correcting the

defects, it concluded that although respondent failed to prove the cost of

correcting the defects, reasonable cost should be awarded in view of the

admitted and proven defects.31 Finally, the CIAC found petitioner entitled to

the 10% retention which is P1,012,139.89 from which respondents claims

should be deducted.32

In effect, both petitioners and respondents claims

and counterclaims were partly granted.

Petitioner elevated the matter to the CA docketed as CA-G.R. SP No.

52200, but the same was denied due course in a Resolution dated July 26,1999. When the resolution was assailed before the Court in a petition for

review on certiorari in G.R. No. 141697, the petition was denied for

petitioners failure to submit a valid affidavit of service of copies of the

petition to respondent.33

Petitioners motion for reconsideration was

likewise denied in a Resolution dated June 26, 2000, which became final and

executory on August 31, 2000 and, accordingly, recorded in the Book of

Entries of Judgment.

Respondent interposed a separate appeal assailing the same CIAC

decision, docketed as CA-G.R. SP No. 52070. Respondent questioned the

CIACs failure to dismiss petitioners counterclaims on the ground of forum

shopping. More importantly, respondent insisted that the CIAC erred in

27 Id. at 71.28 Id. at 73.29 Id.30 Id.31 Id. at 74.32 Id.33 The decision was embodied in a Minute Resolution dated March 6, 2000.


7/17


concluding: that the termination of the construction contract was illegal; that

it is not entitled to liquidated damages and the excess cost to complete the

project; that it is entitled to a reduced amount for the correction of

petitioners defective work; and, that petitioner is entitled to the value of the

materials, equipment and tools left at the jobsite.34

On February 28, 2005, the CA rendered the assailed decision

affirming with modification the CIAC decision by awarding respondent

liquidated damages of P1,572,674.51. The CA agreed with the CIAC that

petitioners counterclaims could not be dismissed on the ground of forum

shopping, because the civil case before the RTC was dismissed for lack of

jurisdiction. Thus, petitioner aptly set up its counterclaims before the

CIAC.35

The CA also sustained the CIACs conclusion on the illegality of

the termination of the construction contract for failure of respondent to

comply with the 15-day notice.

36

It, however, could not agree with theCIAC as to respondents claim for liquidated damages. Notwithstanding the

declaration of the illegality of the termination of the contract, petitioner

could still be charged with liquidated damages by reason of the delay in the

completion of the project. The CA explained that the right to liquidated

damages is available to respondent whether or not it terminated the contract

because delay alone is decisive.37

Aggrieved, petitioner moved for reconsideration of the decision. On

September 7, 2005, the CA issued a Resolution denying the motion,

followed by another Resolution dated December 5, 2005 correcting the

earlier resolution, which inadvertently referred to respondent as the party

who filed the motion where in fact it was filed by petitioner.

34 Id. at 23-24.35 Rollo, pp. 36-37.36 Id. at 38-39.37 Id. at 40-41.


8/17


Petitioner now comes before the Court in this petition for review on

certiorari with this sole issue:

WHETHER OR NOT THE COURT OF APPEALS HAS DECIDED A

QUESTION OF SUBSTANCE OR HAS DECIDED IT IN A WAY NOTIN ACCORD WITH LAW OR WITH APPLICABLE DECISIONS OF

THE SUPREME COURT WHEN IT RULED AND MODIFIED THE

DECISION OF THE CIAC FINDING PETITIONER LIABLE TO PAYRESPONDENT LIQUIDATED DAMAGES.

38

The petition is without merit.

At the outset, the Court notes that the case involved various claims

and counterclaims separately set up by petitioner and respondent. The CIAC

thus awarded petitioner the retention pay; the unpaid value of its work

accomplishment; and the value of the materials, tools and equipment left at

jobsite. On the other hand, it awarded respondent only with the excess cost

to complete the unfinished project. Petitioner elevated the matter to the CA,

but the same was dismissed, which dismissal was affirmed by the Court. In

the separate appeal filed by respondent, the CA modified the CIAC decision

by making petitioner liable for liquidated damages. It is on this issue that

petitioner comes before the Court raising in particular the propriety of

making it liable for liquidated damages.

The resolution of the issue of respondents entitlement to liquidated

damages hinges on whether petitioner was in default in the performance of

its obligation.39

The liability for liquidated damages is governed by Articles 2226-

2228 of the Civil Code which provide:

Article 2226. Liquidated damages are those agreed upon by the

parties to a contract, to be paid in case of breach thereof.

38 Id. at 17.39 Empire East Land Holdings, Inc. v. Capitol Industrial Construction Groups, Inc., G.R. No.168074, September 26, 2008, 566 SCRA 473. 489.


9/17


Article 2227. Liquidated damages, whether intended as an

indemnity or a penalty, shall be equitably reduced if they are iniquitous or

unconscionable.

Article 2228. When the breach of the contract committed by the

defendant is not the one contemplated by the parties in agreeing upon theliquidated damages, the law shall determine the measure of damages, and

not the stipulation.

Based on the above provisions of law, the parties to a contract are

allowed to stipulate on liquidated damages to be paid in case of breach. It is

attached to an obligation in order to ensure performance and has a doublefunction: (1) to provide for liquidated damages, and (2) to strengthen the

coercive force of the obligation by the threat of greater responsibility in the

event of breach.40

The amount agreed upon answers for damages suffered

by the owner due to delays in the completion of the project.41

As a pre-

condition to such award, however, there must be proof of the fact of delay in

the performance of the obligation.42

To resolve the question of default by the parties, we must re-examine

the terms of the Construction Contract and the relevant documents which

form part of the parties agreement. As a general rule, contracts constitute

the law between the parties, and they are bound by its stipulations. For as

long as they are not contrary to law, morals, good customs, public order, or

public policy, the contracting parties may establish such stipulations,

clauses, terms and conditions as they may deem convenient.43

The pertinent provisions of the Construction Contract which lay down

the rules in case of failure to complete the works read:

40 Philippine Charter Insurance Corporation v. Petroleum Distributors & Service Corporation, G.R.No. 180898, April 18, 2012; Filinvest Land, Inc. v. Court of Appeals, G.R. No. 138980, September 20,

2005, 470 SCRA 260, 269.41 H.L. Carlos Construction, Inc. v. Marina Properties Corporation, G.R. No. 147614, January 29,

2004, 421 SCRA 428, 445; 466 Phil. 182, 205 (2004).42 Empire East Land Holdings, Inc. v. Capitol Industrial Construction Groups, Inc., supranote 39, at

489.43 Philippine Charter Insurance Corporation v. Petroleum Distributors & Service Corporation,supranote 40.


10/17

Decision - 10 - G.R. No. 170732

ARTICLE IX

FAILURE TO COMPLETE WORK

Section 1: The CONTRACTOR acknowledges that the OWNER

shall not suffer [loss] by the delay or failure of the CONTRACTOR to

finish and complete the works called for under this Contract within the

time stipulated in Section 6, Article IV. The CONTRACTOR herebyexpresses covenants and agrees to pay to the Owner liquidated damages

equivalent to the One-Tenth of One Percent (1/10 of 1%) of the

Contract Price per calendar day of delay until completion, delivery

and acceptance of the said Works by the OWNER to a maximum

amount not to exceed 10%.

Section 2: Any sum which may be payable to the OWNER for

such liquidated damages may be deducted from the amounts retained

under Article V, or retained by the OWNER from any balance of whatevernature which may be due or become due the CONTRACTOR when any

particular works called for under this Contract shall have been finished orcompleted.

Section 3: The lawful occupation by the OWNER of any

completed portion of the PROJECT subject of this Contract shall not be

deemed as a waiver of whatsoever rights and/or remedies the OWNERmay have or is entitled to under the law and/or under the terms and

conditions of this Contract, nor shall it diminish whatever liability theCONTRACTOR may incur for the liquidated damages provided herein

with respect to the delays in the installation of the other portions of the

Works in the PROJECT.

Section 4: The obligation of the CONTRACTOR to pay damages

due to unexcused delays shall not relieve it from the obligation tocomplete and finish the performance of the Works, and to secure the final

certificate of inspection from the proper government authorities.

Section 5: The provision on liquidated damages [notwithstanding],the OWNER, upon certification of the PROJECT MANAGER that

sufficient cause exists to justify its action, may without prejudice to any

other right or remedy and after giving the CONTRACTOR and its suretiesproper notice in writing, terminate this Contract and take over the

performance of the Works either by administration or otherwise, and to

charge against the CONTRACTOR and its sureties the excess costoccasioned thereby.

Section 6: If the Works are suspended for an unreasonable length

of time, without any justifiable cause by the CONTRACTOR, suchsuspension shall be taken as abandonment of the Works, and the OWNER

shall have the right to declare the CONTRACTOR in default; and the

former shall be entitled to charge against the CONTRACTORSPerformance Bond all forms of damages it may suffer and to hire another


11/17

Decision - 11 - G.R. No. 170732

CONTRACTOR to finish the Works. Suspension of the Works for at least

fifteen days shall be deemed unreasonable.44

(Emphasis supplied)

Notwithstanding its categorical conclusion that petitioner was in

default, the CIAC refused to award respondent the stipulated liquidated

damages in view of the latters unlawful termination of the Construction

Contract for want of a valid notice to petitioner. Petitioner insists that the

award of liquidated damages made by the CA be deleted, because it was not

given the chance to finish the works within the period of commitment to do

so on or before November 15, 1997.

A perusal of the significant provisions of the Construction Contract as

quoted above and the relevant construction documents would show that the

CA did not err in concluding that the rights to liquidated damages and to

terminate the contract are distinct remedies that are available to respondent.

Section 4, Article IX of the Construction Contract states:

Section 4: The obligation of the CONTRACTOR to pay damages

due to unexcused delays shall not relieve it from the obligation to

complete and finish the performance of the Works, and to secure the finalcertificate of inspection from the proper government authorities.

Moreover, Article 21.05 of the General Conditions amplifies

petitioners liability for damages, to wit:

21.05. LIQUIDATED DAMAGES: It is understood that time is an

essential feature of this Contract, and that upon failure to complete the

said Contract within the contract time, the Contractor shall be required to

pay the Owner the liquidated damages in the amount stipulated in theContract Agreement, the said payment to be made as liquidated damages,

and not by way of penalty. The Owner may deduct from any sum due or to

become due the Contractor any sums accruing for liquidated damages asherein stated. For purposes of calculating, the actual completion date shall

be the date certified by the Architect under Article 20.11 hereof.45

44 CA rollo, p. 142.45 Exhibit A; Expanding Envelope No. 1.


12/17

Decision - 12 - G.R. No. 170732

Also significant is Article 29.04 thereof which explains the owners right to

recover liquidated damages:

29.04. OWNERS RIGHT TO RECOVER LIQUIDATED DAMAGES:

Neither the taking over by the Owner of the work for completion byadministration nor the re-letting of the same to another Contractor shall be

construed as a waiver of the Owners rights to recover damages against the

original Contractor and/or his sureties for the failure to complete the workas stipulated.

In such case, the full extent of the damages for which the Contractor

and/or his sureties liable shall be:

a. The total daily liquidated damages up to and including the

day immediately before the date the Owner effectivelytakes over the work.

b. The excess cost incurred by the Owner in the completion ofthe project over the Contract Price. This excess cost

includes cost of architectural managerial and administrative

services, supervision and inspection from the time theOwner effectively took over the work by administration or

by re-letting the same.46

Clearly, respondents entitlement to liquidated damages is distinct

from its right to terminate the contract. Petitioners liability for liquidated

damages is not inconsistent with respondents takeover of the project, or

termination of the contract or even the eventual completion of the project.

What is decisive of such entitlement is the fact of delay in the completion of

the works. Stated in simple terms, as long as the contractor fails to finish the

works within the period agreed upon by the parties without justifiable reason

and after the owner makes a demand, then liability for damages as a

consequence of such default arises.

It is undisputed that petitioner failed to perform the contracted works

within the period as originally agreed upon. It is likewise settled that an

extension was requested by petitioner and granted by respondent. With the

modification of the contract period, petitioner was obliged to perform the

works and deliver the units only until April 7, 1997. Yet it still reneged on

46 Exhibit A; Expanding Envelope No. 1.


13/17

Decision - 13 - G.R. No. 170732

its obligation. However, as aptly found by the CIAC, petitioner did not seek

additional time within which to complete the project. We quote with

approval the CA observations in this wise:

It is the Tribunals finding that the Respondent-Contractor is delayed inthe completion of the project. Except for the delay in the turnover of the

sites extensions which were granted, Respondent did not file for and did

not obtain formal extension of its time of completion beyond April 7,1997. The Tribunal notes the Respondent-Contractor did not document at

the time the reasons now being claimed as causing the delay. The Tribunal

finds it unusual that for a project with a Project Construction Manager,

there were also no proper reports showing and reporting the changes,

additions and deviations to approved schedules. x x x47

In other words, petitioner never sent notice to respondent regarding a request

for extension of time to finish the work despite its claim of the existence of

circumstances fairly entitling it to an extension of the contract period.

Assuming that the reasons for valid extension indeed exist, still, petitioner

should bear the consequences for the delay as it deprived respondent of its

right to determine the length of extension to be given to it and, consequently,

to adjust the period to finish the extra work.48

Besides, the General Conditions specifically lay down the

requirements for a valid extension of the contract period, to wit:

Article 21.04. EXTENSION OF TIME: The Contractor will be allowed

an extension of time based on the following conditions:

a. Should the contractor be obstructed or delayed in the

prosecution or completion of the work x x x then the

contractor shall within fifteen (15) days from the

occurrence of such delay file the necessary request forextension. The Architect may grant the request for

extension for such period of time as he considers

reasonable.

x x x x

47 CA rollo, p. 67.48 Advanced Foundation Construction Systems Corporation v. New World Properties and Ventures,

Inc., G.R. No. 143154, June 21, 2006, 491 SCRA 557, 579-580.


14/17

Decision - 14 - G.R. No. 170732

c. x x x However, if in the opinion of the Architect, the nature of the

increased work is such that the new Contract Time as computed

above is unreasonably short,the time allowance for any extension

and increases shall be as agreed upon in writing.49 (Emphasissupplied)

Also, Section 3, Article V of the Construction Contract emphasizes

that any extension in the contract period must be in writing, to wit:

Section 3: The OWNER may, at any time during the progress ofthe performance of the Works in the PROJECT, order a change or changes

in the plans and specifications; provided, that in such cases, any increase

or decrease in the Contract Price above stipulated shall be subject to

proportionate adjustment mutually agreed upon.Nevertheless, in the event

that the alterations and the changes mentioned herein shall affect theContract period, an extension thereof shall also be subject toproportionate adjustment in writing. x x x

50 (Emphasis supplied.)

Without doubt, no further extension was sought after the expiration

of the first extension given by respondent. Any and all claims of its

entitlement to period adjustment should not be granted to petitioner as would

excuse it from liability for delay.

While in its letter dated September 22, 1997 respondent indeed

required petitioner to submit a formal written commitment to finish and

complete the project by a certain date, the same should not be deemed a

waiver of its right to collect liquidated damages. The request made by

respondent was only necessary in the determination of whether petitioner

could still complete the works or there is already a need for respondent to

take over the project or engage the services of another contractor. Such is

only relevant in the exercise of respondents right to terminate the contract

but not in the entitlement to liquidated damages.

In answer to petitioners request for schedule adjustments, respondent,

in its letter dated January 11, 1997, allowed such extension and fixed the

49 Exhibit A; Expanding Envelope No. 1.50 CA rollo, p. 140.


15/17

Decision - 15 - G.R. No. 170732

new date of completion, the latest of which was April 7, 1997. It is

noteworthy that at the time such adjustment was given, respondent specified

that liquidated damages shall be applied beyond the extended period given

as provided for in their Construction Contract.51

Clearly, respondent had

also made a demand for the payment of said damages should delay be

incurred by petitioner beyond the new agreed dates.

As no extension was validly agreed upon and in view of the

established fact that petitioner failed to complete the works and deliver the

housing units within the stipulated period, petitioners liability for liquidated

damages arose, which is 1/10 of 1% of the contract price per calendar day of

delay to a maximum amount of 10% of the contract price. Petitioner failed

to meet its new deadline which was April 7, 1997. It even proposed that it

be allowed to complete the works until November 15, 1997, way beyond the

original as well as the extended contract period. Undoubtedly, petitionermay be held to answer for liquidated damages in its maximum amount

which is 10% of the contract price. While we have reduced the amount of

liquidated damages in some cases because of partial fulfillment of the

contract and/or the amount is unconscionable, we do not find the same to be

applicable in this case.52

Per the CIAC findings, as of the last certified

billing, petitioners percentage accomplishment was only 62.57%. Hence,

we apply the general rule not to ignore the freedom of the parties to agree on

such terms and conditions as they see fit as long as they are not contrary to

law, morals, good customs, public order or public policy.53

Thus, we find no

reason to disturb the CA conclusion.

WHEREFORE, premises considered, the petition is DENIED for

lack of merit.

51 Exhibit K; Expanding Envelope No. 1.52 R.S. Tomas, Inc. v. Rizal Cement Company, Inc., G.R. No. 173155, March 21, 2012.53 Id.


16/17

Decision

I

)

SO ORDERED.

WE CONCUR:

.--

PRESBITERO/.(

VELASCO, JR

Assoliate .Justice

~

ROBERTO A ABAD

Associate

Justice

~ i r p e r s o n

JOSE CAT AL ftNDOZA

Asso

iate Ju1tice

ATTESTATION

].R. No. 170732

I

attest that the

conclu.sions in

the above

Decision had been

reached

in

consultation before the case was assigned to the writer of

thej)pinion

r

the

Court s

Division.

1

I

j

/;

I

L

PRESBITERO

J

VELASCO, JR

A ociate Justice

ChairpiJson

Third

Division


17/17

Decision

- 17

G.R.

No. I 70732

CERTIFIC TION

Pursuant to Section 13 Article VIII

of

the Constitution and the

Division Chairperson s Attestation, I certify that the conclusions

in

the

above Decision had been reached in consultation bd()re the case was

assigned to the writer

of

the opinion

of

the Court s Division.

~ ~ -

M RI

LOUR ES

P A

SERENO

Chief Justice

Aei vs. Coa & Hcrc Case

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Transcript of Aei vs. Coa & Hcrc Case